Political Expedients Trump Good Energy Policy

Politicians rarely understand it and energy is poorly suited to political planning given the complexity of factors & conflicting interests among powerful actors. Firms near politicians get corrupted, and political power is deployed for politically powerful interests, often locking in outdated technologies and locking out new methods. Remember the ethanol debacle? Seemed a good idea. As with other great sounding “change” mantras, the the Obama folks also screwed up energy policy.

You can read the Washington Post article linked yourself, but since I know that most will not, let me mention and comment on some of the salient facts.
President Obama probably believed his own propaganda about clean energy. He evidently really thought that he, with his extensive engineering background, and his similarly highly qualified political staff could make better decisions than consumers, energy producers and scientists.

So let's give our leader credit for sincerity, even if his confidence exceeded his capability. It was based on lack of practical experience, not on malice. The more general lesson here is that this is ALWAYS the way it is with big government "change" programs. Each time we fall for it again. It is the triumph of hope over experience (sort of like Obama himself).

Once the honest, if naive, commitment was made - to the tune of $80 billion - the political wing of the Obama team went into overdrive. They didn't understand the problems they were confronting and they did not want to go to the old-boys network to find out, so they went to a new-boys network. The new boys were often venture capitalists with stakes in some of the companies backed by the administration, according to records studies by the Washington Post, and many of those investors had given to Obama's 2008 campaign.

About this time, the Obama team was learning that there was nothing like a "shovel ready" project. But they were ready with shovels. They were ready to shovel piles of money to "investments" and were not much interested in the due diligence usually employed by investors.

The slogan might have been, "If you can call it green, you can get some green from Obama."

Solyndra is the poster boy for this kind of political management, but the process is just messed up. It is similar to the politically-based decision making the Obama folks deployed to "fix" the financial system or address the health care problem of higher costs.

In all these three signature issues - clean energy, financial reform & health care cost control - the Obama team recognized real problems, identified valid goals and after that did almost exactly the wrong things to solve the problems or reach the goals. They explain their failure by a combination of blaming others or just saying that "It was harder than we thought."

Meanwhile, in the energy field at least, other developments are changing the whole picture. The shale gas boom is resetting the whole energy equation. If government behaves reasonably, new technologies will lower energy costs, reduce CO2 emissions and create more than a million new manufacturing jobs- not bogus jobs "created by government debt, but real ones created by a real increase in wealth flowing from clean American energy.

This is a win that Obama could have had by doing ... nothing. Let the market work and let the ordinary rule of law operate. In all three signature issues - energy, health care & financial fixes - good policies would have been best but NOTHING would have been better than what the Obama folks gave us.

So let's praise the Obama folks for their sincerity. They sincerely believed in the intrusive government programs they pushed on the American people. Let's also give them credit for identifying real problems. In a college classroom or an hour long drama on television, this would have been enough for a happy ending. In the real world, this works not so much. Now that we have done our once in a generation genuflection toward to theory of omniscient government, can we get back to the reality of the imperfect world? Here our efforts work imperfectly, but better than those simpleminded methods those cost the big bucks, extend the power of politicians and bureaucrats and generally do more harm that good.

Posted by Christine & John at December 27, 2011 8:34 PM
Comments
Comment #333620
This is a win that Obama could have had by doing … nothing. Let the market work and let the ordinary rule of law operate.

The status quo before Obama was a system whereby energy derived from fossil fuel extraction received massive subsidies. Doing nothing would have only lead to further perversion of the free market. If Obama had his way, we’d have a carbon tax or cap & trade scheme by now, which would have corrected the external costs of combustion. I don’t think any reasonable person thinks Obama would have done these silly venture capitalist schemes if he’d been able to make people pay for the Carbon Dioxide they release into the atmosphere.

Let’s also give them credit for identifying real problems.

You do realize that most of Obama’s opposition fails to recognize why continuing to burn fossil fuels for energy is a real problem? I’m probably going to get bogged down once again trying to teach some elementary physics to a conservative commenter who fails to think for himself/herself, but instead simply copies and pastes propaganda from the right wing media.

Posted by: Warped Reality at December 28, 2011 12:18 AM
Comment #333622

Warped

Okay - what Obama should have done is actually get government subsidies out of the energy markets, not drop in $80 billion more.

Also be careful with your definition of subsidies. The tax code “subsidizes” exploration in the sense that you can deduct from taxes expenses related to unsuccessful attempts. If we allow only “breaks” on success, we will kill any industry.

Imagine if a retail store could deduct expenses only for those things directly tied to a successful sale.

Re the carbon tax - I would have/did support that. Obama did not prioritize that in his actual actions. He did not even prioritize rationalizing subsidies to fossil fuels. Instead he spent more than half his time on company visits (read the second link) on those photogenic “green projects” that have not worked out.

Presidential attention is a precious commodity. Obama wasted it on what couldn’t work and neglected what could.

Re fossil fuels - before it looked like it would really work, many environmentalists called natural gas the bridge to the future. It emits significantly less CO2 than coal and oil, which it replaces; it is a nearly perfect complement to wind energy and it is clean compared to other energy generation in almost every other way.

Advancing technologically requires government help in terms of R&D support and information dissemination. These are things that government has done well for generations. What government does poorly is act as an investor or detailed planner. This is the business Obama got into and he failed, predictably.

You cannot judge Obama what he “would have” done in a more perfect situation or what he said he was going to do. He cannot sell hope anymore now that we can see his record.

The Obama record is one of enthusiastic and expensive support for failed ventures often ventures pushed or owned by big contributors. He applied crony capitalism to the energy problem, which resulted in a lot of spending and not much progress. In fact, his attention and spending on things that did not work probably retarded progress on those that might have worked.

Politicians positively thrive on making promises and cutting ribbons for “new” ventures. They hope to draw away attention when these things don’t work. It is hard to pick winners. Ironically, government picking can often turn winners into losers,as the attention and money gets them to support popular rather than effective choices.

Obama has a record. It is worse than if he had done nothing.

Posted by: C&J at December 28, 2011 6:29 AM
Comment #333657
The tax code “subsidizes” exploration in the sense that you can deduct from taxes expenses related to unsuccessful attempts. If we allow only “breaks” on success, we will kill any industry.

The fact is that the people who burn fossil fuels externalize their costs to the taxpayer. This constitutes a much larger subsidy than anything alternative energy sources get.

Re the carbon tax - I would have/did support that.
Yet you continue to bash the only people in Washington who support such remedies while at the same time you give your support to those who oppose those remedies.
Obama did not prioritize that in his actual actions.
You are right. Obama prioritized getting our economy back on track instead.
Re fossil fuels - before it looked like it would really work, many environmentalists called natural gas the bridge to the future. It emits significantly less CO2 than coal and oil, which it replaces; it is a nearly perfect complement to wind energy and it is clean compared to other energy generation in almost every other way.

I am still very optimistic about natural gas’s prospects. Recently, some concern has been raised about the impact fracking has on groundwater. Nevertheless, I believe it’ll be possible to exploit much of our natural gas resources without damaging too much of our ground water. The government just needs to provide a framework whereby the natural gas extraction industry bears the costs of any damage they cause to the water supply. We cannot tolerate cost externalization in any sector.

What government does poorly is act as an investor or detailed planner. This is the business Obama got into and he failed, predictably.
This idea of using government in this way originated on the Right. Conservatives in the Senate wielding the filibuster said no to a carbon tax or cap & trade program, but said yes to these crony capitalism deals, which I think is a far worse state of affairs. Does Obama share blame for going along with conservatives? Sure he does, but we mustn’t let the speck in Obama’s eye distract us from the log in eye of the Right.
You cannot judge Obama what he “would have” done in a more perfect situation or what he said he was going to do. He cannot sell hope anymore now that we can see his record.
It depends if the judgement is absolute or relative. On any absolute scale, Obama fails horribly at what he has done. However, on a relative scale comparing Obama to his peers in the GOP we have a different story. Many GOP leaders continue to insist that burning coal and oil without bound is not a problem, which is dead wrong. In my mind, Obama’s recognition of the problem trumps any criticism the GOP is able to muster. In order for the GOP to even have a chance of solving the problem with Anthropogenic Climate Change, the GOP first needs to recognize the significance of Anthropogenic Climate Change. If you want to talk about how Obama compares to some hypothetical candidate that promises to implement a carbon tax or cap and trade program, then we can agree that Obama sucks, but in the meantime you cannot simply point out Obama’s flaws and win by default. You must provide a viable alternative and right now that is not what I’m seeing from the GOP. The version of Mitt Romney that served as my governor could have been that alternative; the version of Newt Gingrich that posed for an advertisement with Nancy Pelosi in favor of cap and trade could have been that alternative. However, neither of those men exist today. Instead, the influence of the Tea Party has transformed those men into something else. I don’t know if Mitt and Newt actually plan on doing what they say or not, but whatever the case may be, those two candidates are not viable alternatives to Obama on this issue.

We can quibble about the harm done by crony capitalism, but at the end of the day every month that goes by without some effort to put a price on carbon will ultimately come back to bite us in the end. The pain caused by such a delay will be so severe that these arguments regarding crony capitalism would pale in comparison.

Posted by: Warped Reality at December 28, 2011 10:30 PM
Comment #333662

Warped


“You are right. Obama prioritized getting our economy back on track instead.” - and that worked out how?

The TARP stopped the economy from free falling. The stimulus was largely wasted, and Obama quickly turned to health care, which he botched, extending coverage w/o cutting costs.

Re Crony Capitalism - Obama did this more than anybody else in the history of the world because he deployed more money than anybody else in the history of the world.

The right didn’t invent this. It has been the MO of government for a long time. Some use it more than others. It is, BTW, very much the hallmark of how politics is done in Chicago. Obama was true to his heritage here.

Re Obama’s accomplishments - He went backwards while talking progressively. He said he wanted to get things done, but expended no effective effort.

He managed to get a massive health care through, which was done so poorly we will be fixing it for a decade. If he had put similar effort into anything else, he would have gotten that done too.

Re Mitt - He is pragmatic and competent - better than Obama on both counts. He is working to get nominated and spinning his position (as all politicians do). But look to his basic abilities and patterns. You need a president who knows how to lead. Obama does not.

Beyond that, if you look at things we (most of us) consider good - Nixon opened to China. No Democrat could have or did. Reagan got the most comprehensive reduction of the nuclear threat of any president. Clinton gave us welfare reform. Presidents who can get good things done are better than those who don’t.

Posted by: C&J at December 29, 2011 5:19 AM
Comment #333708

“He managed to get a massive health care through, which was done so poorly we will be fixing it for a decade.”

C&J,

Better to be fixing a flawed product than not having any product all to fix. The same with criticisms of “green energy” initiatives. Doing nothing is not an option, in my opinion.

Posted by: Rich at December 29, 2011 8:49 PM
Comment #333711

Rich

That is not always true. Doing the wrong thing is worse than doing nothing. Imagine if you are in Chicago trying to go to for Seattle. Are you better off staying where until you figure out the map or should you just drive as fast as you can toward Washington on the theory that moving wheels and spending money on gas is better than nothing?

Posted by: C&J at December 29, 2011 8:59 PM
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